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Third bailout coming as shutdown looms

Prime Minister Scott Morrison has given notice a third economic package is being devised in preparation for a near total shutdown of the economy, as he unveiled a $66 billion package to help workers and businesses already affected.

Under the new package, workers let go will be eligible for a welfare wage of up to $1100 a fortnight – and possibly more – while small and medium businesses struggling to survive will receive boosted cash payments of between $20,000 and $100,000.

Sacked and stood-down workers will also be able to withdraw $20,000 from their superannuation to help tide them over, and the government and the banks will co-fund a new $40 billion SME loan facility to provide government guaranteed loans. Insolvency and bankruptcy laws will also be relaxed.

These measures were part of a massive $66 billion economic assistance package unveiled on Sunday which, Prime Minister Scott Morrison said, was not about stimulating the economy but helping those "feeling the first blows of the economic impact of the coronavirus".

Mr Morrison said there would be more economic bailouts needed as the crisis worsened, which he said it would.

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The third package is likely to include more wage subsidies, measures to ensure food deliveries to the elderly and others stranded in their homes, and even transporting healthy workers to areas of need.

"Workforce issues in particular are very important,'' Mr Morrison said.

The spending measures alone add up to $83 billion, about 4 per cent of GDP.

Up to $100,000 for small businesses

A key measure of the first package, the $25,000 payments for businesses with turnovers up to $50 million a year, will be hiked to a maximum payment of $100,000 per business and extended to not-for-profit charities.

Eligible businesses that pay salary and wages but are not required to withhold tax will receive a minimum payment of $20,000, up from $2000 in the first package.

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Under the scheme, businesses that pay the Australian Taxation Office income tax on their employees’ salary and wages either quarterly or monthly will receive a payment equal to 100 per cent of the amount withheld, up to a maximum of $100,000 per business.

David Rowe

While the $100,000 payments can be used for wage subsidies, an estimated 200,000 to 300,000 workers who have been, or will be, laid off or stood down will be given fast access to a new welfare wage to tide them over.

Dole payments will be temporarily doubled to up to $1100 a fortnight for these workers, as well as those already on the unemployment benefit.

Sole traders, full-time employees and casual workers will be eligible for the six-month "coronavirus supplement", which will cost the budget $14.1 billion.

The supplement, to be paid from April 27, will also be extended to existing recipients of the Jobseeker Payment (formerly known as Newstart) in a significant short-term concession to the welfare lobby's campaign to raise the rate of the dole.

Mr Morrison said in many cases, recipients will become eligible for other welfare payments such as rent assistance or a family tax benefit, potentially adding "several hundred dollars'' to the welfare wage.

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All welfare recipients excpet those receiving the boosted Newstart papyment, will receive a second $750 one-off payment in July, on top of the payment they will receive after March 31.

Help for retirees

Also announced Sunday were several measures to help retirees. The deeming rates for pensioners were reduced by another 0.25 per cent and the drawdown rate for superannuation was halved for this financial year and the next.

Controversially, people in financial stress will be able to withdraw $10,000 from their super both this year and next. These withdrawals will be tax free and not affect welfare payments.

Industry Super Australia said the change "must be handled very carefully in order to prevent the compounding of liquidity pressures that may be faced by superannuation funds in the current market conditions, and as they support anxious members".

Mr Frydenberg said up to $27 billion could be withdrawn, which was less than 1 per cent of the $3 trillion in superannuation funds.

"The prudential regulator APRA has advised it will not have a significant impact on the industry overall."

Mr Morrison also announced a new $40 billion loan facility for small and medium businesses. This is to complement an announcement by the banks on Friday that they would freeze repayments on business loans for six months, at a cost to the banks of $8 billion.

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Under the Coronavirus SME Guarantee Scheme, the government and the banks will tip in $20 billion each for loans to be administered by the banks.

The loans will be interest free for the first six months, and will be for a maximum of $250,000 over three years. The government will guarantee 50 per cent of each loan.

More than 10,000 people poured into the nation's capital on the ninth day of protests over police brutality, but what awaited them was a city that no longer felt as if it was being occupied by its own country's military.